I only have 15 years left on my 30 year mortgage loan, with rates so low, should I refinance? I recently refinanced but rates are better now, should I do it again? Should I refinance my mortgage?

I get these questions a lot. The answer is......It depends. Here are a few of the questions I ask my clients/prospects to help them to determine the answer.

What is your current interest rate? How much do you currently owe?

Do you still live in the home, or is it being rented? If a rental, different rules apply.

Are you comfortable with your payment? If yes, you can pay off your mortgage faster by keeping the same payment at the lower interest rate.

What will the cost be to refinance? How long will it take to re-coup those costs.

How long do you plan on staying in the home? If less than the time to re-coup the costs to refinance, it will not be worthwhile.

Do you have anticipated income reductions or expense increase (baby, college, medical costs, etc.) Is there any uncertainty in future income?

Do you have equity? Are you "underwater" (owe more on your home than recent sales in the area)? You may qualify for a refinance with special programs even if this is the case.

How is your credit? Have you been over 30 days late in the last 12 months? Even FHA streamlines and VA IRRL (Interest rate reduction loans)will probably require a full credit report.

What are your goals with regard to the refinance? Lower payment, Cash Out, Shorter Term?

Do you have other debt at higher interest rates that could be paid off faster if your mortgage payment was lower?

Do you like paying the bank more than the going rate for borrowing money?

We are currently working with a borrower with a VA mortgage who has a current interest rate of 6.5% but only has 15years left on a 30 year mortgage. We suggested refinancing the loan to a new 15 year loan at 4.25% or below with us paying all of the closing costs except the fee paid directly to VA. The payoff on the current loan in this example is $218,857. Adding the funding fee paid to VA, the new loan would be $219,960. In just 4 months the cost of the funding fee would be recouped and as a result of this refinance the borrower would SAVE OVER $240 each and every month for the remainder of the mortgage. The last payment on the new loan would be the same date as the last payment would have been. For all intents and purposes nothing would change except the size of her bank account. And, if this borrower simply applied the savings to the new mortgage, she would save over $23,000 in just 5 years. Not bad for a couple signatures and a little time (OK “couple” might be a bit of an understatement).

If you have 15 years left on a 30 year mortgage and refinance to a 30 year mortgage your payment will be significantly lower.

a. If you pay it off in 30 years, you will have paid more in interest than if you would have if you would have continued to pay the higher interest for the 15 years remaining.

b. If you continue to pay the equivelant of the higher interest payment toward your new mortgage, you will pay significantly less interest and pay the mortgage off years faster.

Talk to your financial advisor regarding investing the monthly savings to determine if that would be more beneficial long term.

SHOULD I REFINANCE MY HOME MORTGAGE LOAN? AT THE RATES AVAILABLE TODAY, IT SURE MAKES SENSE TO FIND OUT!! Talk to a mortgage professional about your specific situation to determine your best option!